Vice-chancellors have accused the Association of University Teachers of damaging the international reputation of British higher education and putting academics' jobs at risk by wrongly claiming that eight universities were in danger of closure.
The AUT has named eight universities that it said "could be left to go to the wall" if ministers went ahead with their "savage" free-market approach to higher education.
The eight universities have seen their annual funding council allocation cut this year, but their vice-chancellors said they were far from facing closure. Deian Hopkin, vice-chancellor of South Bank University, one of the eight named, said the AUT had "embarked on a potentially dangerous and possibly self-fulfilling course of action" and that "the proposition itself was based on the crudest form of accounting analysis".
Dr Hopkin said the AUT took no account of the overall financial health of the institutions, but simply looked at one year's allocation from the Higher Education Funding Council for England, when most universities have been diversifying their income base over a number of years. He said that 40 per cent of South Bank's income was from Hefce funds, with 20 per cent from the National Health Service, and 8 per cent from overseas student fees.
The institutions named by the AUT are: Luton, facing a 10 per cent funding cut; South Bank, facing a 6.1 per cent cut; Lincoln, with a 5.7 per cent cut; Greenwich and Hull, facing 1.2 per cent cuts; and North London, Coventry and Leicester, facing cuts of less than 1 per cent for 2002-03. All the institutions denied that the cut had put them in any serious danger.
It is believed that Hefce is concerned about the financial health of only four institutions, not necessarily any of those named, and not all universities.
Dr Hopkin said: "The AUT is raising false alarm among potential clients, not only at home but especially overseas. What does a potential student do when he or she reads that the university they have chosen is said by a respectable professional association to be at financial risk?"
Sally Hunt, general secretary of the AUT, said: "I am saddened that a vice-chancellor seems more concerned with shooting the messenger than engaging with the real issues... Universities are underfunded, their staff are underpaid and yet they are still doing a superb job. Together with Universities UK and other unions we have taken a joint stance in pressing the government on these issues."
But vice-chancellors of other named institutions, backed firmly by Universities UK, have also hit out. A spokesperson for the University of Leicester said the AUT's claim was "ill-informed and damaging". "Leicester refutes the AUT's assertion particularly at a time when it has admitted the largest number of undergraduate students in its 80-year history."
David Chiddick, vice-chancellor of the University of Lincoln, said: "We addressed our position with respect to recruitment and the market through a restructuring plan in early 2001... the University of Lincoln cannot be considered to have been 'left to go to the wall'."